Economic interventionism - Definition and Overview

Economic interventionism is a term used to describe activity undertaken by a central government to affect a country's economy in an attempt to increase economic growth and/or standards of living. The term was popularised by Ludwig von Mises, and is particularly common in the works of classical liberal and libertarian writers.

Economic interventionism is seen as a common feature of left-wing governments which seek to establish or maintain a significant degree of public control over the economy, arguing that central coordination or state assistance is beneficial to the vast majority of people or that market forces alone will not produce good outcomes (due, for example, to market failure, or simply because a more market-based system would result in more inequality).

Economic interventionism is also perceived in some highly conservative or authoritarian administrations which believe that the state has a responsibility to manage and direct the economy in order to uphold certain moral values. These conservatives typically see the free market as a threat to tradition, social order and state authority. Examples of interventionist but conservative governments are the post-WW2 French administrations that followed the policy of dirigisme.

The fiercest opponents of economic interventionism are the same groups who coined the term in the first place: classical liberals and libertarians. As a result, "economic interventionism" is sometimes considered a derogatory name for mixed economies.